Linking the need for immigration reform to a renewed call for officials to end raids on businesses, Mayor Antonio Villaraigosa on Thursday complained that the federal government needs to revise its priorities.

"When Immigration and Custom Enforcement doesn't have the resources to go after criminal gang members, they shouldn't be targeting legitimate businesses," Villaraigosa said at a MacArthur Park news conference as demonstrators gathered for a May Day rally and march.

"It is time for the federal government to acknowledge it has a failed immigration policy and (instead) put its resources where it would do the most good." Villaraigosa released a study prepared by the Los Angeles Economic Development Corp. that examined three industries in Los Angeles that have high levels of immigrant workers - fashion, furniture manufacturing and food.

The three industries combined employ 204,150 workers and have a direct and indirect impact of $18.3 billion on the local economy, according to the report. "These industries are very, very important to the Los Angeles economy," said Jack Kyser, chief economist for the LAEDC. "What we hope is that this report will spark some discussion in Washington, D.C., to take another look at this issue.

"We are afraid that other states will try to take advantage of the ICE raids in Los Angeles and try to convince these businesses to move."

The LAEDC report warns that immigration raids may be the last straw for manufacturing businesses that have already contemplated fleeing L.A.'s high-cost environment in search of cheaper land and labor in other states or countries.

ICE officials said they are not targeting L.A. businesses but are only responding to tips and information on companies that may be breaking the law. "Los Angeles certainly is ... where we have an active and ongoing enforcement effort, but I don't think it would be accurate to characterize the effort as more robust in Los Angeles," said Virginia Kice, spokeswoman for ICE.

Kice said Secretary of the Department of Homeland Security Michael Chertoff and the Bush administration have pushed for comprehensive immigration reform.

"As long as these laws are on the books, it's our obligation to enforce them."

Villaraigosa last month met with Chertoff to voice concerns over the stepped-up raids against employers, started last year after Congress failed to approve an immigration reform measure.

"We agreed to disagree," Villaraigosa said. "We told him of the impact on our economy and he said he would form a task force that would include city leaders, businesses and community representatives to further explore the issue."

Villaraigosa said most of the firms that hire illegal immigrants pay living wages and are considered good employers.

"What ICE should do is go after those that mistreat their workers and take advantage of them," Villaraigosa said.

Alexandra Spunt of American Apparel was cited by the mayor as a representative of one of the good firms.

Spunt said American Apparel pays the highest wages in the fashion industry - more than $12 an hour - and provides health benefits to its 4,000 workers in Los Angeles.

Gary Toebben, president of the Los Angeles Area Chamber of Commerce, said he supports the mayor's call for a suspension of the raids, saying the issue can be resolved if Congress would take up immigration reform.

Toebben said 41 percent of Los Angeles residents are foreign-born and the city accounts for 21 percent of all immigrants in the United States. "The status quo is no longer good enough," Toebben said. "As a business community, we call on our California delegation to take the lead to pursue immigration reform."

Villaraigosa also used the news conference to defend Special Order 40, implemented by the Los Angeles Police Department. It prohibits police from questioning immigrants simply to determine their legal status.

"Our police officers are not federal agents," Villaraigosa said. "We think it's important for the safety of our city to have cooperation between the police and people who are victims of crimes."

If someone is arrested, however, he said their immigration status should be checked and ICE officials notified if the person is in the country illegally. "There are approximately 12 million undocumented people who work and live in the United States, performing some of the toughest jobs to put food on our table," Villaraigosa said. "This is our reality.

"At a time of economic downturn, instead of going after criminal gang members and employers who violate the rules, ... they are threatening bread-and-butter industries of our city."